RBI Chief Says Rupee Relatively Stable Despite Dip
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The depreciation of the rupee is due in part to the US dollar's strength and it has fallen less, and in a less volatile fashion, than other currencies, Reserve Bank of India (RBI) Governor Raghuram Rajan said.
While the rupee has slid against the strengthening dollar, he told a New York audience on Tuesday, "it has actually strengthened against other countries."
"The Indian press is all about rupee depreciation ... But if you look at the rupee's volatility relative to other currencies, you'd have to argue that the rupee has been one of the most stable currencies (against) the dollar," Rajan said.
"It's been much stronger than other currencies."
After long outperforming other emerging market currencies, the rupee has started to sag in part due to perceptions of delays in reforms under Indian Prime Minister Narendra Modi, who was elected a year ago.
The central bank has so far done little to halt the rupee's slide to 20-month lows against the dollar, a sign that Rajan wants to save ammunition in case a pending US interest-rate hike worsens volatility.
Rajan called the government's spending cuts "significant," adding that "there has been some amount of fiscal consolidation over and above what the government is owning up to."
Inflation, he said, "has come down tremendously in India."
The rupee depreciated by 11 paise to 63.78 against the US dollar in early trade on Wednesday at the Interbank Foreign Exchange due to appreciation of the American currency overseas riding on strong economic data.
Forex dealers said increased demand for the dollar from importers also weighed on the local currency, but a higher opening in the domestic equity market limited rupee's fall.
The rupee had recovered by five paise to close at 63.67 against the US currency in the previous session due to fag-end selling of dollars by banks and exporters.